Company activities are governed by the Kumul Petroleum Holdings Limited Authorisation Act 2015, which mandates it as the corporate nominee to hold and manage State interests in oil and gas projects in the country.

KPHL manages its petroleum licence interests through a number of subsidiary companies.

KPHL has enjoyed unqualified audits every year since 2014, demonstrating the company’s good governance, transparency and accountability. Once accounts are audited, a summary is included in the KPHL annual report. As these become available they will be posted on this web site.

BUILDING THE NATION THROUGH OUR ENERGY RESOURCES

The Kumul Petroleum Strategy 2023-2027 provides a framework of strategic themes and associated objectives that will enable the company, with sufficient financial standing and professional staff, to participate in the development of the non-renewable and renewable energy resources of the country in the decades to come. The Strategy has six strategic themes with 27 associated strategic objectives.

Executive Summary

Despite the impacts of Covid-19 during 2020, Kumul Petroleum continued its role as State nominee in petroleum projects in the country.

The LNG plant at the PNG LNG Project facilities at Caution Bay outside Port Moresby once again operated above its rated capacity of 6.9 mtpa, producing 8.8 million tonnes of LNG for export. With 114 shipments taking place during the year, the main income source for the organisation was assured.

However, international petroleum and LNG prices dropped due to the worldwide Covid-19 pandemic and they only partly recovered by the end of the year. Kumul Petroleum revenue consequently dropped compared to the previous year, reducing from US$697 million to US$484 million, which affected dividend and other payments to the State.

In the energy sector, Kumul Petroleum maintained its shareholding in NiuPower Limited along with its 50/50 partner, Oil Search Limited. The NiuPower gas-fired power station continued to dispatch power into the Port Moresby power grid throughout the year, generating electricity worth a total of K47.6 million.

In line with its stated strategic goals, Kumul Petroleum continued its philanthropic support of health initiatives, supporting the national Department of Health and finalising long- term funding agreements with the two main hospitals in Lae and Port Moresby to assist treatment of cancer and heart disease.

Also in support of Government initiatives, Kumul Petroleum continued its construction of electricity transmission lines in the Hela and Southern Highlands provinces. This infrastructure will provide necessary and important linkages between the high voltage line extensions of the Ramu grid constructed by PNG Power and the rural communities who need access to electricity. Combined with initiatives of other agencies, such connections will go a long way towards achieving the NEROP target of enabling electricity to reach 70% of the population by 2030.

Kumul Petroleum also supports national development in other ways including operation of the Kumul Academy providing specialist industry training, donations to health facilities and funding for a range of sporting codes including rugby league, soccer, golf and cricket.

Kroton No.2 Limited was incorporated in June 2009. The company name was changed to National Petroleum Company of Papua New Guinea Kroton Limited (NPCP Kroton) in September 2010.

In 2014 NPCP Holdings Limited was incorporated as a subsidiary of the Independent Public Business Corporation (now Kumul Consolidated Holdings), in line with NEC Decision 264/2014. This decision also directed that all petroleum assets of the State held by other entities be transferred to NPCP Holdings Limited.

In 2015 the National Government determined that State assets be consolidated under a suite of Kumul sectoral companies – Kumul Consolidated Holdings, Kumul Mineral Holdings Limited and Kumul Petroleum Holdings Limited. In October 2015, NPCP Holdings Limited changed its name to Kumul Petroleum Holdings Limited (KPHL).

KPHL is the State nominee to participate in petroleum projects in the country in line with provisions of the Oil and Gas Act. Through subsidiary, Kumul Petroleum (Kroton) Limited KPHL holds a 16.57% interest in the PNG LNG Project, operated by ExxonMobil. Other subsidiaries hold interests in other petroleum licences.

Kroton Equity Option

The PNG LNG Project Umbrella Benefits Sharing Agreement (UBSA) signed by the State and other stakeholders in 2009 determined the distribution of statutory benefits to the various stakeholders in line with the Oil & Gas Act.

The UBSA also provided for a commercial option that enabled nominated project- impacted provincial governments and landowners to acquire additional indirect equity in the project through purchasing a 25.75% shareholding in the company holding the State’s interest in the PNG LNG Project, within a certain opportunity window.

The nominated provincial governments and landowners failed to secure finance to acquire these shares within the allotted opportunity time window; however, NEC considered that these stakeholders should still participate in and receive benefits from the PNG LNG Project. Kumul Petroleum Holdings organised vendor finance in 2016 for this purpose, known as the Kroton Equity Option, for these parties – the Kroton Equity Option Beneficiaries, until alternative commercial finance could be organised.

The structure of this vendor finance enabled the nominated Beneficiary Groups to receive a distribution even while this vendor finance was being repaid, a guaranteed distribution to be made available each year. At an average oil price above US$45/barrel an annual amount of US$10 million was to be paid to the Beneficiary Groups. At an average oil price above US$55/barrel an annual amount of US$15 million would be paid to the Beneficiary Groups; and at an average oil price above US$65/barrel an annual amount of US$20 million would be paid to the Beneficiary Groups.

Every year from 2017 funds for distribution accrued for the beneficiaries, except for 2020 when the oil price dropped below US$45/barrel. In December 2021, distributions accrued to that date were paid to the impacted provincial governments of Gulf, Central, Hela, Southern Highlands and Western. Funds for other beneficiary groups will be released once clan vetting and landowner identification exercises are complete.